Bloomberg News: Citi Sees a Bullish Break for Gold

Article by Ranjeetha Pakiam in Bloomberg News

Citigroup Inc. has raised the possibility gold may extend its impressive rally should it breach a technical level against a major U.S. equity market benchmark, adding to positive commentary around the metal.

The ratio between gold and the S&P 500 Index is “testing key pivots that extend up to the Christmas highs,” Shyam Devani, senior technical strategist, said in a note. “It is only a matter of time before a significant bullish break occurs that could trigger a rally to the tune of 25% in favor of gold.”

Among bulls, UBS Group AG says prices will surge to $1,650 over 12 months as central-bank easing spurs flows into bullion-backed exchange-traded funds.

“Equity markets continue to look vulnerable, especially given the deeper inversion of the U.S. yield curve,” Citigroup said, highlighting the potential for gains in bullion: “Sometimes the ratio between asset classes is too hot. Sometimes too cold. But sometimes the chart signals ‘Just right’.”

Spot gold slipped 0.1% to $1,541.08 an ounce on Wednesday, but is still up 20% this year.

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